CFM Files: Lot M–88: Box 142: United States Delegation Minutes;

United States Delegation Minutes of the Second Part of the 20th (5th Restricted) Meeting of the Council of Foreign Ministers, Paris, June 14, 1949, 7 p.m.

secret

Second Part

Present

U.S.S.R.

  • Mr. Vyshinsky (Chairman)
  • Mr. Smirnov
  • Mr. Pastoyev

United Kingdom

  • Mr. Bevin
  • Sir I. Kirkpatrick
  • Mr. Peyton-Smith

United States

  • Mr. Acheson
  • Mr. Jessup
  • Mr. Bohlen
  • Mr. Reber (for Austrian Discussion)

France

  • M. Schuman
  • M. Parodi
  • Interpreter

M. Schuman said he wished to explain what he had had in mind concerning Austria since there had certainly been a misunderstanding. He said the paper they were now submitting1 was merely to make [Page 1002] clear the points set forth in his memorandum on Sunday.2 He said what they had in mind was that all claims arising out of property to be relinquished to Austria would be covered by the $150,000,000 payment and that there would be no further claims concerning this property against Austria.

Mr. Vyshinsky said that M. Schuman’s explanation far from clearing up the situation merely increased the confusion. This was apparently a new and additional demand which was not acceptable to him. He said that Article 35 and the eight paragraphs set forth in the Soviet document of January 24, 19483 reported the Soviet claims concerning German assets in Austria. He had understood that they would be satisfied in return for the withdrawal of Soviet support for the Yugoslav claims. He had never understood that the $150,000,000 would cover all claims to these properties. He would, however, have no objection to the Deputies examining this point.

M. Schuman said he wished to be perfectly clear that there was no question of Article 48 bis, which was in any event to go to the Deputies, but from the text of the memorandum on Sunday he thought it had been quite clear that all these claims were waived. He then read the appropriate sentence from the document to the effect that if the Soviet Government would in exchange for this payment agree that there should be no further undefined obligations in connection with the final settlement on German assets, then their claim for $150,000,000 might be met.

Mr. Vyshinsky said that he considered this question of charges on this property as one of the still open points in regard to the treaty which he felt should go to the Deputies. He said he was not stating that he would refuse M. Schuman’s suggestion but that he just did not know what the nature of the claims were or in what amount. He repeated that he had given up support of the Yugoslav claims in return for satisfaction of all Soviet demands on German assets as set forth in the June [January] 24, 1948 proposal.

As to war booty referred to in the present paper which he had just received, this was a new subject which he also felt should go to the Deputies.

Mr. Bevin said that they had tried in this document to carry out the sense of M. Schuman’s memorandum which to him meant very clearly that all future claims in regard to the property relinquished to Austria would be waived by the Soviet Government in return for $150,000,000. Article 48 bis was a totally different matter and should go to the Deputies.

[Page 1003]

Mr. Vyshinsky then read from his record of what he had said earlier this afternoon4 to the effect that the Soviet Delegation had no objection to M. Schuman’s memorandum which consisted of the satisfaction of Soviet claims to German assets in return for a withdrawal of their support for Yugoslav claims. He said that this involved the $150,000,000 payment, the oil rights, and the shipping. It said nothing about the question of certain types of claims on the property. As to war booty that meant cannon, tanks, machine guns, etc. which had been captured and which he felt had nothing to do with German assets. He was, however, prepared to refer the question of war booty to the Deputies. It was possible, of course, that certain enterprises which the military had claimed as war booty might be discussed. He said that if there was a genuine desire to contract a treaty he thought that M. Schuman’s memorandum as he understood it afforded a basis, but if there was an insistence on the waiver of these possible claims on the property he would have to refer the matter to his Government.

Mr. Bevin said that in his view the payment of $150,000,000 meant that certain German assets held since the end of the war by the Soviet Union would be returned without charge to Austria.

M. Schuman denied that it was a new demand. He said the quid pro quo for the $150,000,000 was the relinquishment of these former German assets to Austria without charge.

Mr. Acheson said that he felt that they should treat the two types of German assets in Austria the same way. He pointed out that in the Soviet proposal it was stated that the property which was to go to them was to be without obligation or encumbrance and that he felt a similar understanding should apply to the former German property which was to be left to Austria.

On the subject of war booty he said they did not have in mind cannon or war material of that nature but industrial property which might have been claimed as war booty. He said from that point of view it made little difference whether it was claimed as a German asset or as war booty but that under the terms of M. Schuman’s memorandum except for the specified exceptions concerning oil properties and shipping the Soviet Government was to return all this property without charge to Austria.

Mr. Vyshinsky said there was a practical problem here and he would try and give an illustration. He said it was true that the value of German assets to be returned to Austria would be without claim, but there were certain of these properties which the Soviet authorities had improved. For example he said of a given number of enterprises [Page 1004] five were to remain with the Soviet Union and five to go back to Austria. What would be the case if in the five to go back to Austria there had been Soviet loans, or other financial assistance which had resulted in the installation of new machinery, new construction, or general improvements. These improvements could not be considered German assets but were in effect a contribution from the Soviet Union which they could hardly be expected to give free of charge to the Austrians. He stated that they would return what was German but they could not return what had been added in the way of improvements by Soviet means without compensation. He said in the case of Austria there had been no improvements made by Austrians in any property held by the Soviet authorities since the end of the war. He stated it was a complicated problem and he was quite willing for the Deputies to discuss it.

Mr. Acheson then said he felt that in our understanding the $150,000,000 relinquished all claims in respect of this property against Austria and he thought it would be wise for Mr. Vyshinsky to consult his Government on this point. In the meantime they would think it over.

Mr. Vyshinsky repeated that they were prepared to accept the $150,000,000 for German assets turned back to Austria but that this would not cover in their view Soviet improvements. He repeated that the Soviet proposals on German assets were those contained in the draft of Article 35 submitted on January 24, 1948 by the Soviet Deputy and that these were accepted and he thought the other open questions in the treaty could be settled by the Deputies.

German Modus Vivendi

Mr. Acheson said he had a number of questions concerning the Soviet amendments and additions to the modus vivendi paper.5 His first one dealt with Soviet changes in paragraph 3(a) (ii). He did not see under existing circumstances from an economic point of view how there could be a balance between the Western zones on one hand and the Eastern zone and Berlin on the other, that the economic and financial situation in Berlin was such that he just did not see how any such balance could be achieved and inquired whether this meant that nothing could go from the West to Berlin unless it was compensated by an equivalent from the Eastern zones.

Mr. Vyshinsky said that their objection to Mr. Acheson’s draft was that it appeared to lump the Western sectors of Berlin with the Western zones of Germany whereas in fact Berlin was in the Soviet [Page 1005] zone. Also he said he thought that Berlin should be regarded as a whole and not by sectors.

Mr. Acheson said that he was not raising any questions of prestige but merely one of practical economic and financial arrangement which was about all that could be covered in a modus vivendi. He just did not see how it could possibly work as formulated by Mr. Vyshinsky.

Mr. Vyshinsky then said that if there was any difficulty about this point why not omit the entire paragraph and leave this question to be worked out on a practical basis in the future.

Mr. Acheson said they would look at it overnight and see what could be done with new language. He said that his difficulty with the Soviet redraft of paragraph 5 was that it appeared to leave to each occupying authority to take the measures to ensure normal functioning of the subjects mentioned and that it would be up to each of them to do what they saw fit. Furthermore, he said that in his view it was quite possible for railways, roads, water, etc. to function normally and still not ensure the movement of persons and goods; that functioning was one thing and the use made of the facilities was another. (Mr. Vyshinsky had difficulty in understanding this point in some measure because of the fact that the word “functioning” in Russian has a somewhat less technical connotation than it does in English and more nearly includes the concept of utilization.) Mr. Acheson added that what we were interested in was a guarantee that the blockade would not be reinstated.

Mr. Vyshinsky said that if a service was functioning normally, it meant that it was transporting normally people and goods and that he felt as to restrictions that the words “improve and supplement existing agreements” on this point made it clear that the communications were to be improved and not restricted.

Mr. Bevin said in a few words what they meant was that there would be no new blockade of Berlin.

Mr. Vyshinsky said that the only blockade of Berlin now was due to the strike6 which had occurred in the British and American sectors through no fault of theirs.

Mr. Acheson pointed out that the Soviet draft had eliminated the instructions to their representatives in Germany to work out an agreement to give effect to these principles.

Mr. Vyshinsky indicated that he would have no objection to the re-insertion of that thought if Mr. Acheson had in mind the idea of reciprocity concerning the counter-restrictions.

[Page 1006]

Mr. Acheson said that what we wished to have perfectly clear was that our access to Berlin would be unobstructed.

Mr. Vyshinsky said that they did not wish to take on obligations which they might not be able to fulfill; for example, in point 5(i) of Mr. Acheson’s paper there was no limit as to the amount of facilities which might be needed to satisfy Western requirements; that we were now asking for 16 trains, later on we might decide that this number should be greatly increased and it would be impossible to meet it, and the Soviet Union, therefore, would be at fault in the agreement. He said that if we were agreed on the fundamentals of some of these problems, it would be possible to reach a juridical agreement, but since they were not, the best that could be done would be a gentlemen’s agreement. He pointed out that their agreement would be made public and would constitute a moral and political undertaking to be executed in good faith on each side. He said their objection to 5(ii) was that it was one-sided and merely called on the Soviet authorities to do something but stated nothing about any reciprocal engagement. As to the movement of persons, he thought that they could perhaps expand point 3 (b) if such was desired.

Mr. Acheson said he would like to point out that in our draft 5(i) referred only to the needs of the Allies which would of necessity be limited and that furthermore we had proposed to run the Helmstedt Autobahn in a desire to be helpful. He said that if this had been accepted it would have been made quite clear that there was no intention of reimposing the blockade, that there were many roads from Berlin to the West and one would be sufficient to take care of all the needs of the occupying powers by road. As to Mr. Vyshinsky’s point concerning 5(ii) and the obligation of the Soviet authorities, that was merely because all the facilities in question ran entirely through the Soviet zone.

Mr. Vyshinsky repeated that in regard to the movement on the roads, 3(b) could perhaps be expanded.

It was agreed that the Ministers would study these papers overnight and meet in secret session tomorrow at 3: 30 to continue the discussion.

  1. The paper read as follows:

    “The Ministers have agreed:

    (a) that Austria’s frontiers shall be those of January 1, 1938;

    (b) that reparations shall not be exacted from Austria, but that Yugoslavia shall have the right to seize, retain or liquidate Austrian property, rights and interests within Yugoslav territory; and

    (c) that, on condition that the settlement includes the relinquishment to Austria of all property, rights or interests held or claimed as German assets or war booty (except those oil assets and Danube Shipping Company properties transferred to the Soviet Union by other clauses of the treaty and retained under Austrian jurisdiction) and a general waiver of creditor claims arising out of control or operation of such property, rights and interests after May 8, 1945, the Soviet Union shall receive from Austria $150 million in six years.” (CFM Files: Lot M–88: Box 140: Minutes and Records of Decisions)

  2. Post, p. 1053.
  3. The text of the Soviet proposal, CFM(D) (L) (48) (A)1, concerning German assets in Austria is printed in Foreign Relations, 1948, vol. ii, p. 1448.
  4. Vyshinsky was referring to the first part of the 20th meeting of the Council, the minutes of which are printed on p. 997.
  5. The text of the modus vivendi paper with the Soviet amendments indicated in footnotes is printed on p. 1051.
  6. Vyshinsky was referring to the strike of the Berlin railroad workers who wanted to be paid in Western marks. For documentation relating to this strike, see pp. 840 ff.